Pa. insurance premiums outstrip wages

Wayne Witkowski

Thursday

Aug 27, 2009 at 12:01 AM

Family health care premiums rose an estimated 5.4 times faster than earnings for Pennsylvania's workers from 2000 through 2009, according to a report issued Thursday by the consumer health organization Families USA. In that 10-year period, family health insurance premiums rose by 95.2 percent, while median earnings rose by only 17.5 percent.

Family health care premiums rose an estimated 5.4 times faster than earnings for Pennsylvania's workers from 2000 through 2009, according to a report issued Thursday by the consumer health organization Families USA. In that 10-year period, family health insurance premiums rose by 95.2 percent, while median earnings rose by only 17.5 percent.

The Families USA report for Pennsylvania is an update of its original ground-breaking 2006 report, which was the first of its kind to document these changes on a state-specific basis. Among the new report's key findings are:

For family health coverage provided through employers in Pennsylvania, the average annual health insurance premium employer and worker share of premiums combined) in the 2000 to 2009 period rose from $6,721 to $13,116 — an increase of $6,395, or 95.2 percent. Between 2000 and 2009, the median earnings of Pennsylvania's workers rose from $24,834 to $29,188 — an increase of $4,354, or 17.5 percent.

The report points out that disproportionately high increases in insurance premiums have continued despite employees receiving "thinner coverage," which offers fewer benefits and/or that comes with higher deductibles, copayments and co-insurance. Other employers have cut costs by placing limits on which employees are eligible for coverage or by eliminating coverage for spouses and children of employees. As a result, Pennsylvania families are mired in a sliding scale of paying more but getting less in health coverage.

"Rising health care costs threaten the financial well-being of families in Pennsylvania and across the nation," said Ron Pollack, executive director of Families USA, during a teleconference call on Thursday. "If health care reform does not happen soon, more and more families will be priced out of the health coverage they used to take for granted."

Rising costs threaten health coverage altogether. Between 2000 and 2008, the total percentage of U.S. firms offering health coverage declined by 6 percentage points — from 69 percent of firms to 63 percent — with small businesses being the most likely to drop coverage.

Another potential catastrophe for families is the possibility that they will join the growing ranks of families filing for bankruptcy because of their medical debts. Prior to filing for bankruptcy, families attempt to balance budgets by dropping phone service, trimming food cost and dropping needed medical or dental care. Despite these desperate measures, however, more than half of all bankruptcies are related to medical costs, said Pollack.

The report shows the burden of rising health care costs is being shared by employers and employees for both family health coverage and individual coverage. Among those findings cited by Pollack:

For family health coverage in Pennsylvania, the employer's portion of annual premiums in the 2000-2009 period rose from $5,424 to $9,955 — an increase of $4,531, or 83.5 percent. For family health coverage, the worker's portion of annual premiums rose from $1,297 to $3,161 — an increase of $1,864, or 143.7 percent. For individual health coverage, the employer's portion of annual premiums rose from $2,094 to $3,879 — an increase of $1,784, or 85.2 percent. For individual health coverage, the worker's portion of annual premiums rose from $373 to $904 — an increase of $531, or 142.6 percent.

"For America's businesses and families, the absence of health care reform is unaffordable and unacceptable," said Pollack. "It will mean that businesses have a harder time staying competitive, and more and more families have to cope with stagnant wages and the loss of affordable health coverage."

Pollack during the call cited four of the many causes of skyrocketing health care premiums: wasteful health care spending, an almost-unregulated insurance market, a dramatic drop in competition in the insurance market and cost shifts from the uninsured, termed a "hidden health tax."

"All of these issues can be addressed in a comprehensive reform of our health care system that will allow businesses and families to afford quality health coverage," Pollack said.

The Families USA report is based on data from the U.S. Census Bureau, the U.S. Department of Labor, and the U.S. Department of Health and Human Services.

A copy of this report is available online at www.familiesusa.org/assets/pdfs/costly-coverage/pennsylvania.pdf.

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